Adam Smith argued in the Wealth of Nations, that the division of labor can dramatically increase productivity and profitability. Today we refer to this as specialization, or dividing a job into separate tasks, each one being performed by a specialist. The idea being that each specialist can become an expert in their task, improving the overall efficiency and end product to the consumer. This concept helped drive the industrial revolution and led to the technology driven world we live in today. We all know and understand this concept, but some of us fail to internalize it in our careers. Those that truly grasp this concept will be able to surround themselves with Trusted Partners that bring value to their own expertise and to their clientele.
As a Trusted Adviser, you surely have the opportunity to work with many that are preparing for or are nearing retirement. Baby boomers have changed the paradigm at every stage in their lives because of the sheer size of this population block. The same is true today as this large group is retiring and making adjustments for their retirement income. Baby boomers are limping towards retirement with significant debt; much more so than their parents. Not all of it is their fault. During the Great Recession, on average, those 50 to 64 years old lost 32% of their net wealth. During this same period, the average debt on their homes spiked to 52%. This could not have happened at a worse time for this large segment of the working population. In 1992, only 19% of households 65 and older carried mortgage debt into retirement, compared to 40% of households in the same age group in 2010. It behooves advisers looking to serve this community to have different strategies and opportunities available to this unique market as their challenges are quite different from the prior generation.
A Reverse Mortgage is a wonderful tool that can be used to assist those that are not as prepared for retirement as they would like to be. In fact, there was $14.88 Billion dollars in HECM Reverse Mortgage endorsements in 2013 alone. The baby boomer generation has much of its wealth locked up in their homes. To access this money, they have a few choices: 1. Sell the home and move to a rental. 2. Sell their home and move to a less expensive home and pocket the profit after closing costs. This strategy can be done using a Reverse Mortgage to purchase the smaller home allowing the homeowner to pocket even more money. Or 3. Stay in their home and access the equity using a Reverse Mortgage. The amount one can receive from this product depends on a few factors; the age of the homeowners, the current interest rate, and the appraised value of the home. Anonymously check your client’s qualification here. This FHA insured program can provide a lump sum payout, a monthly check guaranteed for life, or it can provide a Reverse Mortgage Guaranteed Line of Credit that can be used as needed and will never be reduced or taken away. A Reverse Mortgage is merely a tool to provide much needed cash for the baby boomer generation. This money along with sound advice from professionals can provide this generation with much needed financial security and peace of mind going into retirement.
Contact me today so we can discuss how partnering will add value to your brand as well as to your clientele.